Foreign aid disbursement still disappointing

Foreign aid disbursement stood at a record $3 billion last fiscal year, but $19.06 billion of aid still remained unused in the pipeline due to the ministries' inefficiency.

“This means our ability to utilise aid has lagged behind our ability to negotiate new aid,” said Zahid Hussain, lead economist of the World Bank's Dhaka office.

He cited the implementation capacity constraints of the line ministries for the wide discrepancy, adding that the “usual problems in land acquisition, resettlement, procurement, appointing project management and politicisation of tendering process continue to haunt project implementation”.

Historically, the amount of unused foreign aid would hover around $5-$6 billion, but from fiscal 2008-09 the sum started rising. In fiscal 2011-12, it crossed the $10 billion-mark to stand at $14.15 billion.

Although the government has given some reasons for the lag, the explanation has been the same over the years. It includes: delays and allegation in bidding process, faulty project documentation, unrealistic requisition for fund allocation and delays in land acquisition.

But the development partners blame the tardiness while appointing consultants and awarding contracts for the mounting unused aid in the pipeline.

Meanwhile, an official of the Economic Relations Division said the government aims to use 20-25 percent of the funds in the pipeline at the beginning of a fiscal year.

In that case, last fiscal year's disbursement, which comes to 16.24 percent, is below satisfactory, even in the eyes of the government.

Between fiscal 2005-06 and 2009-10, disbursement against opening pipeline stood between 21 percent and 27 percent, with the highest disbursement in the last two decades taking place in fiscal 2007-08, when the immediate past caretaker government was in charge.

The country was on the receiving end of a handsome number of commitments for foreign aid in the last two to three years, but the absorption capacity of the ministries and divisions did not improve, which left a huge amount of unused foreign aid, according to the ERD official.

Until fiscal 2009-10, the country on average received commitments worth $2 billion every year, but since fiscal 2011-12, it rose to upwards of $5 billion, according to ERD statistics.

In fiscal 2012-13, various multilateral and bilateral donors committed $5.84 billion, almost the same as in the previous fiscal year.